Photograph by Chris Wattie — Reuters
By Dan Primack
August 31, 2015

Avid Life Media, the Canadian company behind recently-hacked infidelity website Ashley Madison, told Bloomberg back in April that it was prepping an initial public offering that would value that company at upwards of $1 billion. The statement was dutifully picked up by the business press (including by us at Fortune), particularly since it included a wise-sounding caveat about pricing in London because Europeans were less squeamish about such things than Americans.

But it seems those IPO plans were a lot like those “millions” of female Ashley Madison members — not legitimate, but rather a giant self-actualization exercise. If you build it, they will come.

According to Reuters, some of the hacked documents suggest that Avid Life’s IPO plans were revealed at the same time that “investors had pressed [the company] to improve liquidity so they could sell shares.” It also reveals that the company had repeatedly sought, and failed, to find a buyer or third-party debt.

 

None of this is the sort of high-flyer image that Avid Life had sought to present back in April. If it couldn’t even raise debt — including, presumably, from lenders outside of North America — why would it have any confidence that it could raise $200 million in equity at a $1 billion valuation, or even find IPO underwriters? And if the company knew that a potential buyer was turned off by (recently resigned) CEO Noel Biderman’s “difficult and very demanding” personality, did it not think that similar issues might arise on a road show?

Or was the entire IPO plan a calculated bluff, leveraging the recent public interest in $1 billion-valued tech startups? Tell everyone that public equity investors are willing to invest $200 million at a huge valuation, and maybe it shakes loose a new buyer who thinks it’s getting a bargain?

 

Even the financials shared in April with Bloomberg are a bit suspect. Fusion recently used hacked data to calculate that Ashley Madison’s revenue growth hit around 30% between 2009 and 2010, but fell consistently through 2013 (when total revenue hit $76.7 million. Bloomberg‘s report was that the site generated $115 million in 2014, which would be nearly a 50% bump. Yes, it’s possible for revenue growth to shoot upward after steadily drifting down, but that’s one hell of a reversal. Moreover, there was a BBC story just one month later that suggested $150 million in revenue (one explanation for the discrepancy could be the inclusion/exclusion of Avid Life properties besides Ashley Madison, including Cougarlife.com and Established Men).

My point here isn’t that you shouldn’t trust a company whose mission is to encourage and enable cheating, nor am I certain that Avid Life execs were fudging the revenue numbers (or even female member numbers, for that matter).

Instead, it is to say that we all must be a bit more circumspect when a company tells us that it is planning for a giant IPO, until there actually are some public documents or strong sourcing to support the claim. How many stories do we see about companies planning an IPO for “next year” or, even worse, “in the next couple of years.” Reporting aspirations is one thing, but that’s different from marking our collective calendars.

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